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Rpb Sa (A Company Incorporated In Accordance With The Laws Of Argentina) v Healthy Food Ltd And Others

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date26 April 2021
Neutral Citation[2021] HKCFI 1153
Judgement NumberHCA399/2020
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA399/2020 RPB SA (a company incorporated in accordance with the laws of Argentina) v. HEALTHY FOOD LTD AND OTHERS

HCA 399/2020

[2021] HKCFI 1153

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 399 OF 2020

________________________

BETWEEN

RPB SA
(a company incorporated in accordance with the laws of Argentina) 		Plaintiff
and
HEALTHY FOOD LIMITED
(港利豐食品有限公司)		 1st Defendant
SLX INDUSTRIAL LIMITED
(盛隆興實業有限公司)		 2nd Defendant
HONGKONG MA TRADE LIMITED
(香港美澳貿易有限公司)		 3rd Defendant
PARTNERS NETWORK WEST EUROPE BV 4th Defendant
BEAUTY MONSTER LIMITED 5th Defendant
CUI JIA YONG 6th Defendant
DAH CHONG HONG (MOTOR SERVICE CENTRE) LIMITED
(大昌貿易行汽車服務中心有限公司)		 7th Defendant
TANG LEI 8th Defendant
NEOTASKS LIMITED
(以太國際傳媒網絡有限公司)		 9th Defendant
SOUTHERN UNION INTERNATIONAL LIMITED
(南方聯合國際股份有限公司)		 10th Defendant
WORLD CHANCE LIMITED 11th Defendant
SOUTHERN UNION LIMITED
(南方聯合有限公司)		 12th Defendant
TOMKO BUSINESS DISPLAY MACHINES (CHINA) LIMITED
(圖美客商業顯示設備 (中國) 有限公司)		 13th Defendant
MARINE SILK ROAD OVERSEAS DEVELOPMENT CO., LIMITED
(海洋絲路海外發展有限公司)		 14th Defendant
EAST SUNNY TELECOM LIMITED
(朝陽通訊有限公司)		 15th Defendant
SMART GOLD HOLDINGS LIMITED
(誠高集團有限公司)		 16th Defendant
FA WEI PHOTOELECTRIC TECHNOLOGY LIMITED
(發維光電科技有限公司) 		17th Defendant

________________________

Before: Hon Linda Chan J in Chambers

Date of Hearing: 22 April 2021

Date of Decision: 22 April 2021

Date of Reasons for Decision: 26 April 2021

________________________

REASONS FOR DECISION

_______________________


1. There is before the Court a summons issued by the plaintiff (“P”) on 6 April 2020 for continuation of the ex parte injunction granted by this Court on 3 April 2020 (“Injunction”)[1] against the 1st to 17th defendants, who were the “3rd tier” recipients of the proceeds of a fraud which had been perpetrated against P. The hearing only concerns the 15th and 16th Defendants (respectively “D15” and “D16”). After hearing submissions of counsel, I made an order continuing the Injunction until trial or further order of the court with costs to be paid by D15 and D16 to be taxed if not agreed. These are the reasons for my decision.

Background

2. P is a company incorporated in Argentina which engages in the business of production and commercialisation of wines, juices and fruit-based drinks, water and dairy products. Mr Juan Alejandro Baggio (“Baggio”) is the president of the board.

3. P is the victim of an “email fraud”. On 4 December 2019, a person impersonated himself as Mr Adrian Clamp from KPMG successfully obtained the email address of Ms Diana Veronesi (“Veronesi”), a staff at P’s finance department. On the same day, a person impersonated himself as Baggio informed Veronesi that she would be contacted by Mr Clamp to assist in providing finance for an acquisition of an Asian based company.

4. Between 3 December 2019 and 18 December 2019, Veronesi was misled into making 8 transfers in the aggregate amount of US$6,823,288 (“1st to 8th Transfers”) to a bank account maintained by Hong Kong HRJ Trade Limited (“HRJ”) at Standard Chartered Bank (“SCB”).

5. The fraud was discovered on 2 January 2020 when Baggio was informed by the bank that several attempted transfers to Hong Kong had been rejected.

6. On 13 January 2020, P commenced HCA 57/2020 against HRJ.

7. With the assistance of the documents provided by the banks pursuant to the disclosure order made by the Court, P was able to identify the “2nd tier” recipients of the 1st to 8th Transfers.

8. On 12 February 2020, P commenced HCA 150/2020 against “2nd tier” recipients which had received the proceeds of the 1st to 8th Transfers. One of the 19 defendants was Tin Loong Telecom Company Limited (“Tin Loong”).

9. Thereafter, with the assistance of the documents obtained from the banks, P was able to trace the whereabouts of the funds transferred from the “2nd tier” recipients to the “3rd tier” recipients.

10. According to the bank statements obtained by P from SCB:

(1) except the 1st Transfer on 3 December 2019, almost the entire proceeds of the 1st to 8th Transfers were transferred out of HRJ’s account on the same days they were deposited into the account;

(2) prior to the 7th Transfer (US$990,655) paid into HRJ’s account on 17 December 2019, the balance in the account was US$3,366.32;

(3) on the same day, almost the entire sum representing the 7th Transfer was transferred out of the HRJ account by way of 9 transfers, of which US$90,000 and US$130,800 were transferred to the account of Tin Loong at SCB; and

(4) the US$90,000 and US$130,800, together with 2 other sums transferred from other parties into Tin Loong’s account, were on the same day transferred out of Tin Loong’s account to (a) D15’s account at Bank of East Asia as to US$212,325 (“D15 Sum”); and (b) D16’s account at China Minsheng Banking Corporation Ltd as to US$530,260 (“D16 Sum”); and

(5) by 2 January 2020, only US$6,423.55 remained in HRJ’s account at SCB.

Injunction

11. On 3 April 2020, P commenced this action against the “3rd tier” recipients who were named as the 1st to 17th defendants. On the same day, P obtained the Injunction against all the defendants up to the amounts they received from the “2nd tier” recipients.

12. The Injunction contains both a proprietary injunction over the D15 Sum and D16 Sum and a Mareva injunction over the general assets of D15 and D16 to the extent that there is a shortfall between the D15 Sum and D16 Sum and the amounts remain in their respective accounts. Given the proprietary nature of the injunction, there is no provision for legal or any expenses incurred or to be incurred by D15 and D16.

13. It later transpires that by the time the Injunction was obtained, the bulk of the D15 Sum and D16 Sum had already been transferred out of the bank accounts of D15 and D16, leaving only the following amounts:

(1) D15: HK$19,413.24, GBP990.09, US$18,040.38; and

(2) D16: HK$562.78, US$59,729.22.

14. On 22 June 2020, P obtained judgment against HRJ.

15. The principles governing the grant of a proprietary injunction and Mareva injunction have been sufficiently stated by Recorder Eugene Fung SC in Zhang Yan v ASA Bullion Ltd [2019] HKCFI 179, at §§11 and 17:

“11. The relevant legal principles regarding a proprietary injunction are as follows:

(1) Where a plaintiff asserts title to property or seeks to trace property which belongs to him, the Court has jurisdiction to grant a proprietary injunction restraining the disposal of that property….

(2) For the grant of a proprietary injunction, there are three elements which the plaintiff has to demonstrate, following the American Cyanamid approach: (a) that there is a serious issue to be tried on the merits; (b) that the balance of convenience is in favour of granting an injunction and (c) that it is just and convenient to grant the injunction. It is not necessary to show any risk of dissipation of assets.….

(3) A proprietary injunction must relate to a specific asset held by or under the control of the defendant, or its traceable proceeds, in respect of which a proprietary claim is raised by the plaintiff….

(4) In order to justify the grant of a proprietary injunction, the plaintiff should ordinarily adduce some reasonable evidence of the existence of the specific asset (or its traceable proceeds) and that the same is being held by or under the control of the defendant. Where the asset forming the subject matter of the proprietary claim has been dissipated and can no longer be traced, a proprietary injunction cannot ordinarily be granted.….

17. For the grant of a domestic Mareva injunction, the plaintiff must show that:

(1) he has a good arguable case on a substantive claim over which the court has jurisdiction;

(2) there are assets within the jurisdiction;

(3) the balance of convenience in favour of grant;

(4) there is a real risk of dissipation of assets, or removal of assets from the jurisdiction, which would render the plaintiff’s judgment of no effect;

(5) he must comply with a strict duty of full and frank disclosure.”

Serious issue to be tried

16. In general, victims of a fraud have a good arguable case against the recipient of funds for constructive trust. They may assert a proprietary claim to the extent that their funds can be traced and identified as representing recognisable assets of the recipient. The plaintiff only needs to show that the recipient has received or retained property in which the...

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